For the past years I have been reading a lot of resources about personal finance and how to reach financial freedom. One common advice that I frequently read from finance gurus and advisors is to start by setting up your financial goals and sticking with your budget plans.
No matter how much you earn if you don’t have a goal or you are not following any budget plans then you are doomed to spend every peso of your salary to unimportant things. I know how hard it is to live paycheck to paycheck and I am the type of person that doesn’t want to borrow money from friends or relatives. I know how hard to stick to your budget and to not succumb to “temptations” (as what I call activities that needs money spending) surrounding you.
So last year, I started to create my financial goal and that is to save (30%) part of my salary to savings and spend the remaining to paying bills, leisure, food and transportation allowance and etc. You don’t have to allot 30% of your salary immediately you can start at 5% then gradually increase it. The reason I can allot 30% of my salary to saving is because I don’t have my own family yet and this time I really want to start the habit of not spending all my money and living paycheck to paycheck.
When creating a budget you need to assess your spending habits and list down activities that you think that you can let go. For example, if you buy a large coffee every day in one of the most popular coffee shop here in the Philippines it will cost you around Php150 a day. That’s Php750 per week or Php3000 per month. If you don’t buy coffee from Starbucks you can save Php36000 a year! In five years you can earn as much as Php180000 (excluding interest), enough to buy a good second hand car. I know that you need that coffee booze every day so you can work but imagine how much you can save if you opt to reduce or not to buy coffee in coffee shops or just create your own coffee. What we do today will surely affect what we are in the future. The earlier you save the more money you can spend or will have in the future.
Setting up your financial goal like following a budget will allow you to take control of your financial future. Setting up a budget can help you know where you are spending your money and can help you make changes to stop overspending.
Here are other some finance goals that you can follow. You can apply one or all of them or create your own budgeting style from the following goals. The following are just guidelines to help you start accomplishing your financial goals or avoid the hurdles that are stopping you to start saving money.
Setting up your Financial Goals
- List down your financial goals. You can categorize your goals according to your time frame for each goal. You can create an excel record of your financial goal to make easier for you.
- Short-Term Goal – for projects that can be finished under six months.
- Medium-Term Goals – for projects that can be finished in six months to a year under.
- Long-Term Goals – for projects that will take more than a year to finish.
- How much money will it take to reach each goal? Estimate the cost of your goal and write it down as one of your category.
- Set a target date for each of your goals on your list, and use this as your deadline that you need to meet or beat.
- Determine how much you need to save in order for you to reach your goal. You can divide the estimated cost of your goal by the number of weeks or month until your target date to know how much money you need to save each week or month to meet your goal. Place it under the “Amount to save weekly or monthly” column of your file.
- Budget for your goals. Rework your budget to include the money that you need to finish your goals. If you still don’t have enough money after adjusting your budget to include your financial goals then think of other ways on how to make extra money to fund your goals.
- Put your plan into action and execute and no matter what happen do not stop until you reach those financial goals.
Here are some tips so you can accomplish your financial goals:
- Be TRUE to yourself.
- Be REALISTIC on the amount of time and money you need to finish your goal. You can set a higher estimate to cover any adjustments.
- Be MOTIVATED. If you are losing hope congratulate yourself on how much you already save and not how much you still need to save to reach your goal. You can also keep a progress report for yourself to see how much you already progress when you were just starting.
- Do not give up and just continue to reach your financial goals. It’s expected that you will encounter setbacks but do not stop. You can set or adjust your target date but do not stop in reaching your financial goals.
- If you need to accomplish several goals pick which one is the most important and make it your priority. After you reach your priority goals you can now move on to the next.